By: Hillel Fuld
The EUR hovered close to a 10-week record versus the dollar on Wednesday, supported by significant U.S. corporate earnings that also boosted global shares.

The USD was on the back foot, slipping against a currency basket and coming under selling pressure vs the JPY as Japanese exporters sold the U.S. currency.

The EUR moved in narrow ranges as investors ancicipated testimony from Federal Reserve Chairman Ben Bernanke later in the day and looked for fresh factors to extend the single currency's corrective rally.

"People are less worried about the euro than they were a month or two months ago," said Johan Javeus, head of global strategy at SEB in Stockholm.

He said signs of weakness in the U.S. economy and receding worries about euro zone public finances assisted to support the euro in holiday-thinned trade.

"But the market doesn't know which foot to stand on. It's not extreme risk aversion or risk demand," he added.

Bernanke gives his semi-annual testimony on the economy and financial policy at 1800 GMT. After a run of weak U.S. data, investors waited to see if his statement would increase speculation the Fed may offer more monetary easing.

By 0747 GMT, the euro was 0.1 percent higher on the day at $1.2895, having pulled back from $1.3029 hit on Tuesday, its strongest since May 10.

Traders said the euro may meet difficulty to make gains in the short term as investors take profits on a rally which has taken it up more than 8 percent since hitting a 4-year low of $1.1876 in early June.

But there was also rumors of bids in the euro at $1.2860/65 and then at $1.2820, with a mixture of stop-loss sell orders and bids then expected around $1.2780/2800.

Analysts claimed euro movements may be minimal before the results of bank stress test are announced on Friday. Some said the results may soothe concerns about how European banks would cope with deterioration in the region's economy.